Responsible Investing: Share Price not only "Value" that Counts!

Dec 3, 2011
Terri Lynn Sullivan

Invest with your Heart! - Photo by Terri Lynn Sullivan

How do we make socially and environmentally responsible investments in a socially and environmentally irresponsible economic system?

With the rise in public consciousness of deep corruption within our political and financial system, people are rethinking how to manage their money. The question arises: “Where should we move our money”? Indeed, entire campaigns have been put into place to help people divest from Wall Street into more localized “Main Street” Banks and Credit Unions. As it turns out, that is not all we may want to divest in…

A deeper look reveals that it is not merely where people’s money is, but what specifically they are investing in that is terrifying to many investors How do we meet our economic objectives, while holding onto our ethical objectives as well? The deep and abiding moral lessons of such movies as “Wall Street” and “Jerry Maguire” come crashing through the veneer of “values” that many Americans absorb by osmosis via numerous clichés: That “greed is good”, all are “equal” before the law, or even that we are a “free nation”.

In “Jerry Maguire”, the sports agent looked at as the “evil” of that industry; taking on whatever money gauging—materialistic tactics necessary to squeeze the client. That very same client screaming, “show me the money” awakening a deep social and moral consciousness of the agent. The movie “Wall Street” displayed the corruption of Wall Street with illegal trading and ruthless, greedy corporations.

The underlying message in both movies is not unlike what many of us are looking for today; more ethical and compassionate, if not more spiritual and humanitarian ways of earning money. Like the characters in these movies, we question our self-awareness of our own role in shaping society, our children’s futures. “How are my investments affecting the social good of society?

Most of us own stocks via mutual funds, and have no control over what the manager buys. If it isn’t entirely “illegal”, it may find it’s way onto our investment portfolios. With these actively managed funds, we trust our “Financial Advisors” at our brokerage firms even more so than ourselves. After all, they are the financial “elites”, or at least the “experts” in investing. They would know what yields a good return better than us.

While this may be true, is return on investment the only thing we should be concerned about? If we do not comb through our client statements and be careful, they may contain sin stocks we are none too proud to own. Such “sin stocks” may include social undesirables (tobacco, firearms etc), belong to problematic industries (defense, nuclear, chemical etc), or engage in poor behavior (environmental degradation, war profiteering, human rights violators) In other words, we could be investing against our own strong morals and desire to make a positive impact on society, rather than a negative one.

When we tell our Financial Advisors we would like to divest in these sin stocks, and choose more socially and environmentally responsible investments, we may hear the proverbial “my job is to make money for my clients, and this is where the money is now”. Of course, with this shortsighted incentive, if our portfolio grows, the Financial Advisor is the one that profits the most. Here lies the endless vicious cycle of these money manipulators controlling markets, our investments, and hence our nation in the wrong direction.

Many of us wish to start investing with a stronger moral philosophy, with the intent to get our nation off the primitive and revolting track of perpetual foreign aggression, dirty energy, and overall social degradation. We want to invest more in environmental sustainability, international human rights, community involvement and safer products, fair and safe workplaces. We wish to invest in companies that reduce carbon footprint. The bottom line is, we want to help our nation see an evolutionary progress, rather than stay stuck in this revolving negative cycle it’s been on.

But who drives investor confidence? Not those of us with E-Trade accounts or besieged portfolios with brokerage firms, trying desperately to grow them in order to afford college for our children. With prices of those college educations at astounding levels due to unwarranted budget cuts across our schools to enable those sin stocks to profit. It’s this fierce cycle of the big investment banks manipulating unprincipled investor choices.

Those big investment banks on Wall Street are making tens of billions per year on such marketing derivatives unbeknown to many investors, referred to as “financial weapons of mass destruction”. Why have we experienced such a financial meltdown? Because of this system, driven by vicious competition and the blind accumulation of profit based on exploitation—and backed by massive military force.

And there lies the problem: To the most part, American Finance has driven this negative cycle, of which has become a criminal industry in and of itself as exposed on the film “Inside Job”. Particularly corrupt is the investment-banking sector. But this is hardly new.

Even as far back as the early 1900’s, bankers met in secret, devising the central banking system for the U.S. During WWII, Wall Street filled ranks of government procurement offices and armament boards, arranging for their cronies to cash in on that little bonanza. Every decade since has been managed by bankers from Wall Street advising Congress and our President on what’s “right for our country”.

Meanwhile, over the past four decades, these financial and political elites have become virtually immunized from the rule of law, empowered to commit felonies with full-scale impunity to act without constraint, while ordinary Americans are imprisoned with greater ease and greater numbers than any other country on the planet. Imprisoned, at times, for doing something positive for our nation, such as protesting against this injustice!

Now, after “investing” trillions of dollars in that obstructive direction, investors around the globe have lost faith in U.S. bonds, with the policy makers in Washington yet to show some sense of responsibility.

For a long while, many of us, blinded by “ideology” did not see the writing on the wall. Now, with over 95 cities across 82 countries, in at least 600 communities in the U.S. protesting against Wall Street… that is changing. But if Congress is unwilling to act against this “too big to fail” financial crisis, we need to take power into our own hands.

As responsible parents, citizens and do-gooders, one thing we can do to try to change the direction of our nation for the better is to divest in any of those sin stocks and switch to Socially Responsible Investing (SRI). SRI looks at stocks based on social or environmental characteristics, rather than solely short-term financial performance. It’s a way of taking your beliefs and values and applying them to the stocks you purchase. It’s way of supporting our country in the best light possible. Welcome to the new dimension of doing our civic duty.

Wall Street corruption has costs Americans over 8 million jobs, especially jobs helping us move in the right direction. Most of us know of at least one instance whereby a recent college grad has felt compelled to decline a job offer based on his or her affirmative moral beliefs. That student did not earn that degree in Sustainability & Environmental Engineering to design “robotics warfare” or nuclear energy. Like the character in the movie “Jerry Maguire”, that college grad is looking for deeper purpose, and a more satisfying existence. To help propel our nation away from this destructive behavior.

Switching to an SRI may seem like a risk, especially with this money market manipulation going on. But we cannot continue to let our personal financial advisors or Wall Street lead us away from forward-thinking investing. Much research suggests that between 1995 to 2010, SRI investments have grown by 380%.

Despite what our advisors say, many SRI strategies perform at least as well as unscreened ones. Perhaps if we all start investing in SRI tactics, those green and ethical stocks would become more the mainstream “financial tools of mass constructive progress”. A step forward rather than backwards.

If anyone out there has insight and experience with SRI, feel free to add to this discussion. For now, here is a list of the “Top SRI Mutual Funds for 2011”.

A good New Years resolution for 2012 might be to start investing with our hearts not merely our wallets!